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Collecting logos. It seems to be all the fad in the startup and VC world these days. VCs are paying up at enormous prices to say that they have GroupOn, Facebook and Twitter on their roster irrespective of whether they really venture funded them or bought in late stage.

And entrepreneurs are working hard to make sure they have as many VC names and famous angels on their cap table for signaling value. As a result they end up taking money from many firms all at once.

I call this collecting logos because it seems that having fancy brands to brag about trumps the logic of maximizing the value of your investor. Here are the problems that I see increasingly crop up for entrepreneurs in collecting VC logos.

1. Leaderless rounds Let’s say you’re raising $1.5m and have 5 different VCs kicking in $200k each and 10 angels taking the balance. There is really no “lead.” This is a problem. Every corporate transaction you’ll do will require somebody to help you to: Think through the options, negotiation terms, get other investors on board, talk with new investors/partners/companies you’re acquiring, etc. With no lead it’s hard to get somebody to play the role. Everybody assumes that somebody else is playing parent.

Even if you’re super successful there will at times be dissent on issues like: Firing founding employees, increasing the size of the option pool, putting in place provisions about selling on secondary markets, agreeing controversial “bet the company” strategic biz dev deals and the like.

2. Not enough skin in the game When investors don’t have enough capital at work – enough “skin in the game” – then you’re simply going to get less of their individual time and attention. I know they’ll all tell you otherwise. But think about it logically. Even if they emotionally want to spend time with all their children it’s hard not to prioritize your huge financial winners. Or at least companies where you have enough money in the deal and enough ownership that it warrants rolling up your sleeves and doing the hard work when things aren’t going well.

3. Nobody’s head on the chopping block The biggest problem with leaderless rounds is that no one individual has their head on the chopping block if things aren’t going well. ”Yeah, that wasn’t a ‘real’ deal for us. We just kicked in $200k. It was seed.” That’s what they’ll be saying to other VCs or their partners as your company is flaming out. If the deal has just one investor, for example, there’s absolutely no hiding for the investor if the company fails. You’re more likely to get their attention.

If you had taken $1.3m from one investor or $650k from two then they would be a lot more accountable. Their partners would see it as “their deal” rather than a company that just “passed the hat.”

I have had this debate publicly with some other VCs. They say “ownership percentage doesn’t matter.” That’s true. If you invested in Facebook or Zynga. Here’s how a VC thinks.

“I’ve got 7 investments and 7 boards. I own 20% of these three companies that are killing it. I’m going to put more wood and more time behind them. I have these 3 ‘problem children’ that are having some difficulties (founder quit, product has no uptake, Facebook just copied them) but at least I have meaningful stakes. 20+%. And I have this other company that I put in $500k and own 5% of. It’s struggling. Ugh. What a time suck it has been. It doesn’t look likely that they’re going to succeed. Oh, well. It least is was a small check.”

It’s not going to be so destructive as that investor being unhelpful. The “lack of support” will be more subtle. They’ll send some intro emails to other VCs but they won’t sell hard that someone else “really has to look at this deal. I love what they’re doing.” They don’t do this because a VC has to protect its reputation with other VCs so sending others your problems isn’t going to win them over for more important deals. Read: Deals in which that VC has a meaningful stake.

4. Fights over follow ons Ironically you also have problems if the company is going reasonably well. See most VCs (let’s say funds $200m or greater) will be putting in their $200k into your round with the hopes that if you succeed they’ll get the chance to write a larger check later and therefore own more of the company. They’re not going to build a successful fund on a 5% ownership for $200k. So as you go out to raise more money you can often find these VCs fighting amongst themselves about who gets to pick up the next round of investment.

I know it sounds like that would benefit you by creating internal competition and higher prices. Trust me, it will become a shit show and you don’t want it.

5. Information leaks Some people give advice that you should always be open with your information. I don’t feel that way. The more people around the table the more knowledge about your company and your actions are going to leak into the market. Often it’s inadvertent. The investor doesn’t intentionally share all of your good ideas with other companies. But once it’s in their head they can’t “un-think” what a brilliant idea you had. It leaks out in unintentional but very real ways.

Is there any good case for taking a large number of VCs into your deal? No

Top 5 excuses for taking many investors in a round 1. “I want as many people helping me in the market as possible.” Wrong. You want a few, highly placed people who are incentivized to work their asses off for you, to shout from mountain tops how much they love you and to think about you constantly.

2. “I want more people around the table to help with the next round.” Wrong. As I’ve said before, too many investors can create problems in downside or upside scenarios. You want motivated investors who have their heads on the chopping blocks.

3. “I didn’t want to have to turn down A,B, C investors. I don’t want them to be pissed off at me or fund my competitors.” Man up. VCs turn down entrepreneurs every day. And VCs are turned down all the time, too. It’s part of the job. If a VC would truly be pissed off at you for not selecting them then you dodged a bullet. If they’re that big of a prick for just not getting selected imagine how much fun they’d be to work with in your darkest hours.

4. “We want some financial investors and some strategic investors so we have to split it up.” Strategic investors are oxymorons. Ask them to be in the trenches with you when the economy totally tanks over night. If you’re company is successful there will be plenty of chances to bring in strategic investors at a later stage when your company is more mature.

5. “We want some investors in New York, some in Silicon Valley and some in Los Angeles to help us with Hollywood.” No. You don’t. You want 1 really strong investor locally to meet you for beers after work when you have strategic issues to go through. You want an investor that will help you interview senior executives for your company. You want an investor who can meet a much broader set of your team than just that CEO. And if you take a second investor it’s OK to either have them be local or cover another important market like NY. But you don’t have to dice up your round like onions.

You don’t need logos. Logos are for insecure people. Just like they were in high school when the cool kids had to wear the right logos on their shirts, shorts and handbags. Show strength & conviction. Make the tough decisions and choose the investors with whom you feel the closest fit. Make sure they own enough to be motivated to work with you in good times & bad.